Where Can Palo Alto Add New Homes?

Palo Alto has a severe housing shortage: a very low rate of home construction over the last fifty years combined with the booming tech economy has given Palo Alto the highest rents in the entire United States.

So what are the realistic options for Palo Alto to expand its housing supply? 40% of Palo Alto is open space in the foothills and baylands, another 19% is parks, and most of Palo Alto's remaining land is zoned for single-family homes.

Surprisingly, Palo Alto has room to build thousands of new homes over the next fifteen years without changing the character of existing residential neighborhoods - if you know where to look. Let’s look at a few places where more homes could be built.

Downtown University Avenue

University Avenue, the heart of Palo Alto's downtownAttractive four-story condos walking distance from downtown

In many ways, the most logical place for Palo Alto to permit new housing is in its historically dense downtown, immediately adjacent to the most heavily used train station on the Peninsula. While there are a few four-story apartments and condos and a sprinkling of older, higher residential towers, most of the downtown is one-story buildings.  It would be in line with the historic and traditional uses in downtown to permit these to be redeveloped up to four stories of housing, with ground floor retail where appropriate.

 To maximize the housing potential for University Ave, the city could consider “car-free” or “car-light” housing, for residents who plan to use bikes, walking, and Caltrain as their primary modes of transportation.  Many residents who work downtown already do not own a car, while many Millennials moving into Palo Alto prefer car-free living. The city could embrace this trend to help reduce traffic impacts from additional residents while freeing up parking lots for more valuable uses.   

Downtown California Avenue

California Avenue: Palo Alto's second downtownApartments rise above the courtyard at Cafe Riace

Originally the town of Mayfield, California Ave has also traditionally been a transit-oriented, mixed-use area.  The blocks on either side of California Ave have long provided denser multi-family housing that allows for use of the train and a short bikeable commute to University Ave. or the Stanford Research Park.

Housing, up to four-stories, along the under-used areas near California Ave could encourage additional foot traffic to the existing shops and restaurants along California Ave. When combined with good parking management, and incentives for car-free or car-light households, housing can be added with minimal car impacts. 

El Camino Real

A typical slice of El Camino Real in Palo AltoGrand_Boulevard.pngParis has the Champs-Elysee, Berlin Unter-den-Linden and Barcelona Las Ramblas.  Palo Alto has… El Camino Real.  El Camino was always designed around the car and is a heavily traveled thoroughfare.  Today, driving along ECR is a less than desirable experience: ugly, rough, and with little housing.  But what if El Camino Real in Palo Alto was a series of pearls along a string, a few clustered, beautiful places of activity (including housing) all within a short walk/bike to shops and transit?

Several cities around us are beginning to approach El Camino in this way.  Mountain View just passed a precise plan for ECR setting up key nodes to align land use (including housing) with better transit use. Palo Alto started an El Camino Master Plan in 2007 with similar ideas, but it was never approved. As we think about our housing shortage, why can’t we plan for housing along El Camino in a way that is respectful to existing neighborhoods but with the advantages of shops, services, and easy transportation options?

Fry’s Site/El Camino Center

The El Camino Shopping Center strip mall housing Frye's ElectronicsHomes above retail in Bethesda, Maryland

 Fry’s Electronics is currently the anchor tenant for the El Camino Shopping center.  As a big box store in largely residential area competing with Internet retail, Fry’s has suffered from a lack of shoppers and many doubt its continued viability as a business in that space.

 If Fry’s does not renew its lease in 2017, the current strip mall could be rebuilt into apartments and condos above neighborhood-serving retail, similar to this example from Bethesda, Maryland above.  The complex would be next to El Camino Real and within walking distance of the California Ave train station.  By considering this as a transit-oriented residential neighborhood, the city could permit up to 600 units along with some neighborhood-serving retail in place of today’s strip mall.

27 University Avenue

The bus waiting area at 27 University AveThe Bay Meadows Town Square project features housing above retail in a public plaza

Situated right next to the University Ave. train station, could this area integrate with the downtown neighborhoods and serve as the new civic heart of Palo Alto?  Moderate density housing over neighborhood-serving retail could include studios and smaller units for young professionals, students, and seniors, similar to the Bay Meadows project above.  Beyond that, some portion could be dedicated to community space or commercial space to incubate new businesses types or nurture arts and cultural efforts.

If the city permitted this to develop as a transit-oriented residential area, this site could accommodate over 200 units.

Stanford Mall

Visitors stroll at Stanford Shopping CenterHomes above a plaza at Santana Row

Although the Stanford Shopping Center began life as a traditional mall, the new trend in shopping is to design mixed-use spaces that offer shops, restaurants, homes, and sometimes offices.

A great example of what the Stanford Shopping Center could become is provided by Santana Row, an upscale shopping center in San Jose that offer shops, restaurants, and public spaces on the ground floor, with housing above.

Santana Row accommodates 834 homes on a parcel half the size of the Shopping Center.  The city could permit housing to be developed above the mall to provide anywhere from 1000 to 3500 homes while moving some of the parking underground to provide more green space.

Secondary Units in Existing Neighborhoods

Secondary homes can come from garage conversionsSecondary homes can be built in the backyard of existing homes

Secondary homes, often referred to as “granny units” or “in-law units”, are separate homes established on the same lot, usually created as a cottage in the back.  They can be an excellent way to allow a property to accommodate an older parent, a returning college grad, a disabled relative, or a tenant while preserving the physical character of the neighborhood.  Palo Alto's senior population is expected to increase significantly, and this could enable many people to age in place independently by enabling their multi-generational family to share two homes on a single property.

Unfortunately, Palo Alto's requirements to build a secondary home on one's property are very stringent compared to those of nearby cities.  The large lot size, parking requirements, and setback standards preclude the possibility that many seniors will be able to take advantage of this opportunity to stay in their homes as they age. By making the city's requirements comparable to neighboring Menlo Park's, Palo Alto could make it realistic to build as many as a thousand secondary units by 2030.

Read our earlier post about secondary units to learn more.

Stanford Research Park

The Stanford Research Park is an auto-centered, single use office parkTree-lined paths wander between office buildings in Mountain View's re-imagined North Bayshore neighborhood

Both Menlo Park and Mountain View are redeveloping traditional car-oriented suburban office parks into mixed-use neighborhoods.  Aside from the environmental benefits of allowing car-light lifestyles, these changes also react to the high demand from workers to live within walking distance of work in an environment with restaurants and nightlife rather than a traditional neighborhood of single-family homes.

Mountain View is considering permitting 5000 apartments and condos in the North Bayshore area near Google, while Menlo Park is considering permitting 4500 units in a former office park near Facebook. In each case, these neighborhoods would be built over a period of many years and be complete neighborhoods with necessary infrastructure such as transit stations, retail, parks, and schools, not just housing. A cautious, step-by-step approach can provide steady relief from ever-escalating rents while giving time to carefully plan changes.

Palo Alto could join this trend by permitting housing and mixed-use development in the Stanford Research Park.  At 700 acres, the research park is truly enormous – much larger than the entire downtown area – and currently employs 23,000 people. Although ambitious, the city could provide a vision that would enable Stanford and its tenants to transform this area.  Allowing redevelopment of even a small part of this area at greater density could allow almost limitless possibilities for housing and other amenities (schools) that would benefit the entire community.


Looked at with a fresh eye, Palo Alto is far from a built-out city. Few parts of Palo Alto remain green fields, but there are many places to add housing above the current uses of the land - and make them into better places at the same time.  As part of Palo Alto's Comprehensive Plan, we must decide where we choose to put new homes: none of these places? some of them? Or all of them?

If you care about the high cost of housing in Palo Alto, please make your voice heard at the Comprehensive Plan Summit this Saturday May 30th in Mitchell Library. The housing discussion is at 2:45pm. You need to pre-register here.

This post is the second of a three-part series. See our first post on why a housing shortage hurts everyone - residents and newcomers alike - and our follow-up post on ways that we can permit more housing through better zoning!

  • Kate Downing
    commented 2015-05-29 16:55:17 -0700
    I would also add that there are plenty of Americans who buy second homes here and then rent them. So turning units into rentals isn’t a problem that’s limited to foreign buyers.
  • Kate Downing
    commented 2015-05-29 16:53:27 -0700
    That’s true, but PA is only 40% renters. It actually would be nice to have more rentals available down here – many people will never be able to afford a home here but could afford to rent here. And I definitely see what you’re saying- I’m not saying that foreign ownership isn’t a problem. It certainly is. But it’s not a reason to not build sorely needed housing.
  • Kim-Mai Cutler
    commented 2015-05-29 16:49:18 -0700
    Kate, even if foreign home-owners do rent out their units to tenants, I still think the behavior is somewhat problematic because it prices people, who want to be homeowners and want to make long-term commitments to a community, out of homeownership and into the renter category. That also removes their ability to accumulate wealth and equity over the long-term, and doesn’t eliminate the long-term insecurity that they may lose their residence at some point in the future.
  • Dl W
    commented 2015-05-29 11:35:04 -0700
    I really appreciate hearing new ideas for how we keep Palo Alto a great place to live in the future. There are some creative, lovely ideas in this piece about how we might increase housing density palatably. It begins, of course, with the assumption that we want to live in a place with denser housing, and I think that’s where the heart of the issue lies.

    It seems to me that we have a philosophical divide in Palo Alto, probably one that is expanding.

    Folks who moved here years ago, came here to live in a small town with lovely weather, a small vibrant downtown, great schools, with proximity both to an engaging large city and the beautiful outdoors, and ease of getting from place to place around town. Many of them don’t want Palo Alto to have higher housing density because it turns our city into something different than what they chose when they moved here (and, for many, made the biggest investment of their lives to buy a house here). We can disparage them by calling them NIMBYs, or selfish because they got their piece of Palo Alto and don’t want to let others in. Or, we can acknowledge that they chose to live here because they love Palo Alto as it is, and reasonably enough, many of them have little desire to see the city become more congested, crowded, and frenetic than the place they initially chose to live.

    Then there are people who are new to the Bay Area housing market —either because they moved from another locale, or because they’ve grown into to needing a place to live other than their parents’. Unsurprisingly, they want an affordable place to live in a desirable locale, preferably not too far from where they work. From their point of view, adding more housing in Palo Alto brings prices down and allows them to have their own spot in this beautiful small city. Many of them bring positive, hopeful visions for how Palo Alto can grow without ruining quality of life. We can disparage them by calling them unrealistic idealists who naively believe that if we just build housing by train tracks we won’t impact Palo Alto local traffic or congestion. Or, we can acknowledge that they have a vision for expanding Palo Alto that allows it to embrace the cycle Silicon Valley is enjoying, and would create something new, certainly different, possibly better.

    These are two very different objectives. This article tries to find some creative ways to achieve the objectives of the second group of people without harming the objective of the first group. I suspect there are a few development options at the margin that can thread that needle.

    But, at some point, we need to decide which vision (or which “middle way” between these two visions) we are going to select as a city. We — the people of Palo Alto — need to choose how much growth we want for our city, and what quality and type of life we want for the future. Certainly the last city council elections provided a sense of direction. And, this weekend’s event sounds like a good opportunity to encourage dialogue. But I’d like to see the City Council find a way to get definitive input about what path the majority of Palo Altons prefer.

    • Two Vibrant New “Downtown Corridors”: Expansive growth — Change existing zoning to encourage significantly more housing downtown & along California Ave allowing for many new multi-story apartment/condo buildings (retaining retail ground floors), plus one major additional housing development in at least one outlying area. This expansive housing growth will allow us to also continue growing office space in Palo Alto to embrace the burgeoning demand.
    • Embrace Expansion: Strong growth — Change existing zoning to encourage moderate growth in housing downtown & along California Ave allowing for a moderate number of new multi-story apartment/condo buildings (retaining retail ground floors), plus at least one moderate housing development in an outlying area. This moderate housing growth will allow us to continue expanding office space at the recent growth rates.
    • Keep the Current Character: Slow growth to maintain the current character of Palo Alto, avoiding increased housing density — No changes to current zoning. Allow for continued slow growth. No attempt to increase the density of housing downtown or along California Ave. Grow as required by ABAG mandates, but no faster than required. This slow growth in housing will require changes to zoning to also slow the growth of office space, so it no longer
      continues to grow so much faster than housing.
    • Hold Tight to Current Goodness — Follow the Atherton lead and tell ABAG no. Grow more slowly than ABAG mandates in an attempt to try to roll-back some of the increase in congestion (in housing and traffic) that has built up over the past 10 years. Change zoning to significantly slow office space growth, as well.

    Obviously, the City Council and a good market research firm can do a better job of outlining four alternatives than I can. But, I believe that having a clear idea of what we collectively want for Palo Alto (what percentage of us wants each of those 4 visions), would help guide our City Council, the dialogues we have about growth, and our own individual thinking about what is right.

    Even for everyday citizens, it’d be good for us to know what our neighbors want to create for the future of Palo Alto.

    Weigh in…do you think the City Council should create a survey asking Palo Altons what their vision is for future growth? Should we rally and try to get this to happen?
  • Kate Downing
    commented 2015-05-28 18:37:25 -0700
    Foreign investment is an issue for all major cities – NYC, Seattle, DC, Miami, London, Sydney, Paris, Milan, etc. Foreigners are looking to park assets in any attractive city with a stable government.

    Let’s assume this article is correct: http://sanfrancisco.cbslocal.com/2015/04/28/realtors-printing-brochures-for-silicon-valley-homes-in-mandarin-to-attract-chinese-buyers/

    And you’re looking at 20% of buyers from China. It says that half of them choose to live in those homes. That means another 10% don’t. My guess is that something like 9/10 of that other 10% rent those homes out. There’s no reason not to and you don’t become a wealthy investor in the first place by leaving money on the table. I myself live in a home owned by a woman in Shanghai. To the extent that a large portion of those units are still being rented, the nationality of the owner is irrelevant. That’s still another unit on the rental market helping us get out of the housing shortage.

    So that leaves 11% (maybe up to 19% if we’re being conservative) of homes going to foreign owners. Sure, that’s an issue and it means we need to build that much more. But I don’t see why we’d say no to the other 80-90% of people looking for housing just to keep out that 11%. That seems a lot like cutting off the nose to spite the face. We’d be hurting far more Americans than we would be foreigners.

    If we wanted to really work on this situation, my own proposal would be to have greater home-buying taxes on foreigners – taxes that could then go towards affordable housing – as well as a very steep tax for keeping a unit empty. Other countries have expansive regulations dealing with foreign ownership – so I’m not sure why you think that’s impossible. In Australia, it’s already illegal for a foreigner to buy a home unless that home added to the housing stock- i.e. was new housing. The UK is now looking to do the same. Given that the US is just now starting to see this as an issue, I feel pretty confident that this is an issue we’re going to find ways to deal with creatively and effectively and it’s not an unmovable rock.

    In the meantime, I don’t think it’s functional or sustainable for every large city in the Western world to refuse to build for its own growing populations because some of what they build might be bought by foreigners. It can’t be that we choose a policy that makes American homeless because we don’t want the Chinese to buy mansions.
  • Cheryl Lilienstein
    commented 2015-05-28 17:57:43 -0700
    NY, Paris, London are neither competent nor willing to do what might be required to provide affordable housing: just like Palo Alto, there’s no shortage of foreign and domestic investment capital driving up property values. So: given the lust for money resulting from development, or the need for corrupt officials to get their money parked somewhere, how would “smart growthers” intelligently “engage” this more powerful reality in order to provide housing for those who need it, rather than those who use it for investment? Might you envision some version of the Patriot Act to, for instance, require people to be citizens in order to purchase property? Prohibit drivers’ licenses? Require purchasers/renters to prove they work in Palo Alto? Will you police how many people crowd into apartments in order to access our schools, or (God forbid) prohibit children? Likely you will say “of course not!” So: what is your plan? The forces of international capital are worth your consideration, before you propose that we all give up what we value in order to accommodate it.

    This community has voted, twice, that we do not want high density development ruining our city. We do value sustainability, open spaces, great schools, a quiet and peaceful environment, beauty, sunlight, parks and want less traffic.

    Realistically, affordability is not going to be achieved in Palo Alto, but a real step forward would be for Stanford to house ALL its employees (and to that end, the Stanford Shopping Center is the ONLY location for more housing that seems realistic, since Stanford CAN provide parking, control who lives there, they have the financial capacity to provide the schools and infrastructure that would be needed, and they already provide some transit solutions).
  • stephen levy
    commented 2015-05-28 14:59:50 -0700
    thank you for showing opportunities. thus changes the conversation to YES WE CAN, now let’s find the best places and most needed types of housing.


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